I’m not going to bury the lede. Last night, my husband and I paid off his remaining undergraduate student loans. All $18k of them.
It felt really good, and really scary. Good because…well…no student loan debt. When we looked at the amount of interest he’d paid in last year alone–$880 (that’s $73 a month)–we knew we had to do something.
So we entered the full amount owed in the “Make a Payment” screen and clicked “Pay”.
We no longer have enough money saved for the downpayment on a house/apartment.
We no longer have a substantial emergency fund of cash reserves.
We don’t have a lot saved, if I want to take a longer unpaid maternity leave.
Or in case one of us falls ill. (And I’ve been there–I had a rare, serious disease in my twenties.)
Which was why I wasn’t celebrating, over a glass of wine and some cake.
I was freaked out.
But although our cash reserves are now pretty depleted, as of today our net worth is higher than yesterday, because we’re no longer paying ~ $2.50 of interest on this debt each day. And I know that that’s a good thing for our financial future.
As much as it scares the heck out of me.
How We Did it
We’re lucky to be in this position. But we’ve worked damn hard to get here, in full time jobs that we didn’t always love.
I spent my twenties working in HR so that I could pay off my own undergraduate debt. I don’t have a graduate degree, like many of my peers. I’m not where I’d like to be, salary-wise, at 33. Not even close.
But now that we’re (almost) debt free, we can take more risks. For me, this means building up my writing business so that it can be my primary job.
We still have about $5,500 debt on my car, which we’re not going to pay off yet. I want to keep a bit of a cash cushion, because, uncertainty. And we’ll need some savings to sign a new lease at the end of this month.
6 Steps We Took to Save Money
1. Work in Full Time Jobs for the Past Decade
We’ve been working for 9 and 10 years, respectively.
2. Limit Travel
Neither of us has traveled a lot. I don’t think we’ve taken a weekend trip for the duration of our relationship, except for my 10 year college reunion. We did take a bus to Philly for my husband to play a show, but we crashed on a friend of a friend’s couch. We’re actually going to try to travel more going forward.
3. Live in A Studio Apartment. As a Couple.
We live in a studio with a low rent ($1,350) in neighborhood at the end of a subway line. It would be really nice to live in a one bedroom and have more space (we saw one for $1,800 when we were looking last year), but we decided to give living in a studio a go to save money. We would probably continue our current arrangement for longer, but we want to leave the city.
4. Before That, Live in Cheap Apartments with Roommates
Prior to our studio, we lived in cheap rooms with roommates to save money. My husband, always, me, for a few years. (I overpaid on rent for too long in my twenties–$1,750 a month to live in a studio on a cobblestoned street in an expensive neighborhood; $1,500 a month for a room on the Upper West Side–until I realized that rent is the generally the number one expense you can reduce.)
5. Stop Buying Clothes, Shoes, Books Make Up
I don’t buy make up, many clothes or shoes, books or really much “stuff” anymore. My main indulgence is groceries from farmer’s markets and organic food from Whole Foods/Fresh Direct–which I view is an investment in my health and the health of my future children, as well as better for the earth. I’m privileged to be able to make this choice. Otherwise, my clothes are from Target, my books are from the library and I sometimes wear concealer.
6. Opt for the Good Health Insurance
I had cancer in my twenties. Health insurance saved my a**. I’ll always choose the best quality (read: more expensive) health insurance plan I can. It might seem counterintuitive. One surgery alone that I had then would have cost $65k had I not been insured. I also don’t want to put myself in the position of not seeking healthcare services I need, because of cost.
Who out there is working on paying student loans off, and what strategies are you using to save?